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What's going on?
Saudi Aramco’s stock hit an all-time high on Monday, as the world’s biggest oil company gets back to its winning ways.
What does this mean?
Aramco broke records when it listed its shares on the stock market in late 2019, only for the pandemic to promptly send demand for oil – and the company’s share price – plummeting. But good things come to those who wait: the oil price has risen more than 80% since the start of last year, and Aramco’s share price has climbed with it. So when the company said on Monday that it’s expecting demand for the slippery stuff to hang around, its stock reached a whole new all-time high. That’s something the Saudi government – which owns the majority of Aramco’s shares – wants to capitalize on: Bloomberg reports that it’s planning to sell some of its shares in hopes of raising even more money than it did from Aramco’s gargantuan initial public offering.
Why should I care?
The bigger picture: Here comes $100 oil.
The problem here is that the oil supply can’t keep up with demand. Energy producers were, after all, cutting back on oil projects even before the pandemic, as governments and investors pushed for lower emissions. And when the pandemic arrived, those companies scaled back production even more. That might be why commodities trader Vitol said on Monday it’s expecting oil – which currently costs $92 a barrel – to sit above $100 for a lot of this year.
For you personally: Feel positive about energy.
It might be a good time to be an oil investor: Bernstein Research reckons the seven energy “supermajors” – including BP, Shell, ExxonMobil, and Chevron – will deliver $38 billion to shareholders this year through share buybacks. That’s almost double 2014’s $21 billion – the last time oil traded above $100 a barrel – and could make now a lucrative time to buy in.
Originally posted as part of the Finimize daily email.
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